New brands with small market shares tend to spend higher on advertising and sales promotions than those with large market shares because:

Question

Quizplus · Accepted Answer

New brands with small market shares need to create awareness about their products/services in order to influence purchase habits. They need to spend higher on advertising and sales promotions to reach a certain threshold of exposure that will have a measurable impact on consumers. This is known as the minimum effective frequency. Once they have established their presence in the market, they can reduce their spending and rely on brand loyalty and word of mouth for sales.

New Brands with Small Market Shares Tend to Spend Higher